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U.S., U.K. Sign New Income Tax Convention

Washington, DC, August 10, 2001 - The United States and United
Kingdom signed a
new income tax convention that, upon ratification by each
country, will replace the existing convention which has been in
effect since 1980. As described in a
Treasury press statement, the newly signed convention will
modernize the tax treatment of cross-border trade and investment
between the United States and the United Kingdom.

Among provisions of interest to U.S. regulated investment
companies (RICs) and their shareholders, the new convention
provides for:

the reciprocal recognition of pension contributions, and

a zero rate of withholding tax for dividends received by
qualifying pension funds.

As under the existing convention, U.K.-source dividends paid to
a RIC generally will be subject to withholding at a rate of 15
percent. The new convention also eliminates several provisions of
the existing convention that refer to the recently repealed
U.K. advance corporation tax.

The new convention generally will enter into effect in the year
following the exchange of instruments of ratification. The
withholding tax provisions will enter into effect on the first day
of the second month following the exchange of instruments of
ratification.